...The problem in such cases, however, is not that markets have failed, but that they are absent. Markets rest on property and cannot function when property rights are not defined or enforced. Cases of pollution are precisely cases, not of market failure, but of government failure to define and defend the property rights of others...

...And it’s markets, that is, the opportunity to engage in free exchange of rights, that allow all of the various parties to calculate the costs of actions. Negative externalities such as air and water pollution are not a sign of market failure, but of government’s failure to define and defend the property rights on which markets rest.

Thoughts on this?

Another thought on this:

When the authors of the above say "Negative externalities such as air and water pollution are not a sign of market failure, but of government’s failure to define and defend the property rights..."

Isn't that another way of saying: [Free] Markets have their limitations. They are good at a great many things, but there will be situations where, if left only to market forces, there would be unacceptable results. So we need government (not just markets) to make things work and be just.

I'm with you (them) if you don't want to label that "market failure", but isn't it a "limitation of [free] markets"?

Absolutely. I think an oversight like the epa type program is good when it's from the market. Because it is open for competition and the result is ingenuity. But the laws, which is the job of government (preferably one for and by the people, with sound currency and the inability to interfere in the market except to uphold the law to the fullest extent...no favoritism) uphold and better define the laws for and by the people. SInce markets exist based on private property in the first place. That includes your air, your food, your water. Market is from exchange in that is free of moral hazard. As we separate exchange from theft in that regard.EDIT TO ADD: Because if someone commits fraud, by making an exchange based on false pretense, that's fraud or theft too. So two persons private exchange should be that. Private. The legality should only get involved if the transaction involves a breach in the law. By fraud, theft, force. All men have the inalienable right to life, liberty and the pursuit.

I think an oversight like the epa type program is good when it's from the market. Because it is open for competition and the result is ingenuity. But the laws, which is the job of government ...

Thoughts?

I'd just like you to clarify what you mean by "when it's from the market".

I completely get what you are saying that markets are based on property rights*, and therefore polluting, say, a river is a violation of those rights. I'm just wondering if by "when it's from the market" you mean:

A: When the EPA-Type function is done BY private companies...

B: When the EPA is a government agency BUT only applies power by defining and defending property rights

C: Something else?

------* I would say "markets rely on the concept of property rights" rather than "are based on" them, but that's minor semantics for this discussion.

There is surely some grey area. I think it would be a combo of the two. Oversight of adhering to the law in instances where complex chemicals are potentially leaked in to the environment is a good thing. And the application of this should apply to the business to incur the cost, rather than having a 3rd party involvement.

Not understand? It was like a freshman economics in-class discussion. The guy talks about academic concepts without any mind towards practical implementation. He's right up there with Nouriel Roubini in his insistence in applying irrelevant academic concepts to world economic policy. I don't want religious adherence to some ethereal concept to have any place in my life, I want practical implementable solutions.

Think about the consequences of implementing the VAT he proposes in that piece in place of income tax. Preposterous on so many levels.

... I think an oversight like the epa type program is good when it's from the market. ...

That will never happen. Ever. Period.

Stop kidding yourself. You have far too much faith in the market's ability or desire to regulate itself. It's not going to happen because 1. there never will be a level playing field in the global economy and 2. big business, left unchecked, will always try to find a way to gain a competitive advantage.

Not understand? It was like a freshman economics in-class discussion. The guy talks about academic concepts without any mind towards practical implementation. He's right up there with Nouriel Roubini in his insistence in applying irrelevant academic concepts to world economic policy. I don't want religious adherence to some ethereal concept to have any place in my life, I want practical implementable solutions.

Think about the consequences of implementing the VAT he proposes in that piece in place of income tax. Preposterous on so many levels.

Julius, I agree...but also see him making a larger point.

As I was reading the article, I too figuratively threw up my hands at many points. He brings in thoughts and concepts that, even if they are correct or could be correlated to what he's saying, he doesn't connect to his topic. In other instances (i.e.: "I would put considerable emphasis on a religious view") he goes off the rails. I do not want an economics model based on a religious view.

The larger picture that I believe is his main point is: The idea that growth is always good is entrenched, but not true. It might have been effectually true in the recent past because the earth is so big and human impact was so small. But that is no longer the case. ~ His main point is: That entrenched idea needs to change if economic theory is going to match physical reality.

-------------------------------------------------------

These are some selections from the article that I think show his main points:

"...growth...has become uneconomical"

"We need to build the physical constraints of a finite biophysical environment into our economic theory."

"Don’t show me the latest article in a specialized journal. Show me the fundamental textbook you teach in the first course" [In answer to the idea that these ideas ARE taking hold. He seems to be saying: Yes, in a few specialized areas or in a few individuals, but not in any way that is mainstream or effecting much.]

"...put the tax on...the resource flow, from depletion to pollution" [Disregarding the VAT tax portion, a tax on limited resources is what he's talking about. Julius, just a few days ago weren't you on here advocating for just this...a gas tax?]

"We live in a growth economy. If it stops growing, everything falls apart. But the reason we live in a growth economy is the underlying assumption that growth makes us richer."

"They capture the privatized benefits while socializing the costs. But that does not change the fact that the costs [of growth] are greater than the benefits. Growth has become uneconomic, even though some people, those in control, still benefit."

Stop kidding yourself. You have far too much faith in the market's ability or desire to regulate itself. It's not going to happen because 1. there never will be a level playing field in the global economy and 2. big business, left unchecked, will always try to find a way to gain a competitive advantage.

You didn't read all the information presented to formulate that ideal. Preconditioned to false market variables. Re-read and then put forth a rebuttal.

As I was reading the article, I too figuratively threw up my hands at many points. He brings in thoughts and concepts that, even if they are correct or could be correlated to what he's saying, he doesn't connect to his topic. In other instances (i.e.: "I would put considerable emphasis on a religious view") he goes off the rails. I do not want an economics model based on a religious view.

The larger picture that I believe is his main point is: The idea that growth is always good is entrenched, but not true. It might have been effectually true in the recent past because the earth is so big and human impact was so small. But that is no longer the case. ~ His main point is: That entrenched idea needs to change if economic theory is going to match physical reality.

-------------------------------------------------------

These are some selections from the article that I think show his main points:

"...growth...has become uneconomical"

"We need to build the physical constraints of a finite biophysical environment into our economic theory."

"Don’t show me the latest article in a specialized journal. Show me the fundamental textbook you teach in the first course" [In answer to the idea that these ideas ARE taking hold. He seems to be saying: Yes, in a few specialized areas or in a few individuals, but not in any way that is mainstream or effecting much.]

"...put the tax on...the resource flow, from depletion to pollution" [Disregarding the VAT tax portion, a tax on limited resources is what he's talking about. Julius, just a few days ago weren't you on here advocating for just this...a gas tax?]

"We live in a growth economy. If it stops growing, everything falls apart. But the reason we live in a growth economy is the underlying assumption that growth makes us richer."

"They capture the privatized benefits while socializing the costs. But that does not change the fact that the costs [of growth] are greater than the benefits. Growth has become uneconomic, even though some people, those in control, still benefit."

YES, not only do I absolutely advocate a large US tax on gasoline, I can even explain WHY in one simple sentence instead of some holier-than-though raving couched in academic flourishes.

And you know what the reaction from most people here would be? "Oh, well that affects ME and makes my driving more expensive so I don't like it. But when it's all academic sounding, it seems great!"

It may be a false market. One that needs major correction. In theory, we can make those corrections here, but we can't control the market manipulation elsewhere. Hence, we will never have a level playing field. and even if we did have a level playing field, businesses are not going to voluntarily commit themselves to 10s and 100s of thousands of dollars of environmental testing and controls per year. The entire argument that an ideal free market will take care of this is pure fantasy.

Julius (and all) I'd love to hear what you think of these central ideas:

* Growth is unquestionably assumed to be a good thing by most economists and politicians (in the US)Yes, add me to that list too. Without growth there is no way to attract capital from the markets.

* Unlimited / unrestricted grown is not unquestionably a good thing. Hypothetical. Give me 10 examples and I'll take them case-by-case.

* A good thing is not a "good thing" if it benefits some while taking advantage of others.Almost every decision is a zero-sum game helping some and hurting others. I got over that a long time ago.

* Capitalism could/should be refined or updated to take into account the environment.Substitute "Policy" for "Capitalism" and I agree with you. Capitalism is merely a concept, not a religion or way of life. Policy is what brings change. Cap&Trade is a good place to start.

-----------

Also, if you have time to listen to podcasts, the one I referenced earlier in this thread gives a good treatment of this main ideawithout the side-tracks and religious shit.

I agree with a gas tax and I agree with you that most people (here and most places) balk
like Turkeys on the day before Thanksgiving whenever the price of gas is raised.

I'd be interested to hear your one sentence answer. And I agree the holier-than-thou
academic BS is part of the problem. If a concept or thought can't be stated directly
then there is a problem. (Not to say that all things are simple. But even complexity
can usually be stated directly.)

Thanks for answering my questions. Will have to get back to those tomorrow, it's
time now to turn on the AC, turn on the heat, and watch some commercials on TV.

PS: I was just thinking back about this and realized there is some over-the-top stuff in that podcast too.But it's not overly academic or religious, just that hecalls Ben Bernanke, "The Most Dangerous Man on the Planet". But even that is, I believe, a bit tongue in cheek.

You want a central banker to villianize, there's plenty of Jean-Claude Trichet to go around. Ben Bernanke is the man who saved the entire world from cataclysmic financial meltdown. But as you inferred earlier, no action is totally free of unintended consequences.

Stop kidding yourself. You have far too much faith in the market's ability or desire to regulate itself. It's not going to happen because 1. there never will be a level playing field in the global economy and 2. big business, left unchecked, will always try to find a way to gain a competitive advantage.

You make it sound like its never happened before.....and again, you make two assumptions that can't be qualified. I'm not kidding myself at all. If you think this system is going to be a level field and that big govt and big business will check themselves under what we have, you're kidding yourself. Never going to happen. Delusional nonsense. This is the road to tyranny and despotism. Fact.

It may be a false market. One that needs major correction. In theory, we can make those corrections here, but we can't control the market manipulation elsewhere. Hence, we will never have a level playing field. and even if we did have a level playing field, businesses are not going to voluntarily commit themselves to 10s and 100s of thousands of dollars of environmental testing and controls per year. The entire argument that an ideal free market will take care of this is pure fantasy.

How can you know the cost of testing if the market is free? You cant/ 100,000 , 1,000,000,000.....saying these numbers under our current system is completely irrelevant to a free market. Competition creates cost reductions. Its really a false argument to speculate price controls when you don't even have a free market.

You want a central banker to villianize, there's plenty of Jean-Claude Trichet to go around. Ben Bernanke is the man who saved the entire world from cataclysmic financial meltdown. But as you inferred earlier, no action is totally free of unintended consequences.

Ben bernanke helped create the conditions for a meltdown in the first place. Giving him credit for saving the world is laughable. Truly laughable.

It sounds to me like people want someone to regulate something even if that means exacerbating the very things we set out to regulate in the first place. Pandering to the idea of perfection in the markets....or creating perfection by regulating. What a pile of rainbow.....

Not understand? It was like a freshman economics in-class discussion. The guy talks about academic concepts without any mind towards practical implementation. He's right up there with Nouriel Roubini in his insistence in applying irrelevant academic concepts to world economic policy. I don't want religious adherence to some ethereal concept to have any place in my life, I want practical implementable solutions.

Think about the consequences of implementing the VAT he proposes in that piece in place of income tax. Preposterous on so many levels.

Hi Julius

I was confused by your initial response to the article - unclear what your issue was. Thanks for clarifying.

As far as him offering solutions and the end result of those solutions, I certainly don't know enough to defend or refute him. I've been reading a up on him a bit and I am interested in the conversation he creates. In one of his books (For the Common Good) he suggest five activities which could be undertaken now, leading to an overall policy shift: 1) significant university reforms; 2) local community-building; and steps toward 3) a relatively self-sufficient national economy; 4) bringing the question of scale into public consciousness; and 5) changing the way we measure economic success.

I know that may seem fluffy, impractical, and possibly meaningless because, as you assert, he fails to provide a plan of practical implementation (and I gather what plan he might propose, or may have already proposed elsewhere in his writing, you would stand in strong opposition to).

Here's what I find thought-provoking about Daly and Adbusters in regard to economic philosophy:

there seems to be two (antithetical) schools of thought: expansionist camp and ecological camp. Is there ANY way to bridge these two camps? It seems the answer is no. The current system doesn't seem to allow for any restriction or reduction of consumption. OK, but this rigidity has consequences--unsustainable global/ecological consequences.

Isn't the goal of an economy to create the greatest good for the largest number of people? Can we add, in a sustainable way?? This economy seems to create wealth imbalance, loss of jobs to overseas competitors, wars and destruction of other nation's economies to sustain itself, all-the-while polluting and exhausting the earth's nonrenewable resources (Daly and Adbusters greatest concern).

Aren't those in the ecological camp addressing a significant concern: Create as much growth as possible, without considering the impact of such growth is short-sighted and unsustainable--how can expansionists (in isolation of the environmental consequences) continue to extol such growth? Above you argue Daly because he "talks about academic concepts without any mind towards practical implementation." But don't expansionists talk about economic models without any mind toward the environmental effects ("real world" consequences) resulting from the implementation of their growth policies?

Just seems like the planet itself has become a negative externality, a consequence utterly ignored by the unfettered growth machine.

Yes, negative externality is one way of looking at the problem that is very helpful.

If you believe that "Cases of pollution are precisely cases, not of market failure, but of government failure to define and defend the property rights of others", wouldn't you be FOR an EPA that does exactly that -- defines and then uses the justice department to defend the property rights of others? You might say (as Sean did) that the current EPA may well need a radical overhaul or even it's descruction and re-creation in a better form. But aren't you saying that you are essentially for some version of the federal government "defining and defending" those rights.

And aren't these issues of pollution (to give one example) so complex and so prone to rights violtions that may not be even noticed for years, that we need something more than just the justice department? Don't we need an agency that has detailed knowledge of these types of problems?

----

I am still thinking about a more comprehensive answer to the article and the posts in this thread, but I wanted to mention now....

The article was more that the most applied current economic thought/models take it for granted that unlimited growth is good an possible -- while science tells us this just can't be so. The earth has limited resources, gets limited energy, and can only handle so much waste.

Pollution is certainly a major way of looking at that, but that's not the only point there. For example, it's also about resource depletion. Who's oil is it? Who's trees? At what rates should we use them. Or is the only answer: Whoever can get to them and sell them has the right to at whatever rate they can.

not with a public that is too ignorant to give a shit...and certainly not if an unregulated company is allowed to be secretive in their practices:dunno:

So you have absolutely no faith in people. Got it.

It sounds to me like people want someone to regulate something even if that means exacerbating the very things we set out to regulate in the first place. Pandering to the idea of perfection in the markets....or creating perfection by regulating. What a pile of rainbow.....

Keep believing that some sort perfection can be attained within the market. Ask govt. to provide more regulations on the regulations that have failed. Perhaps if we regulate the regulators, we can better regulate the regulations. Sounds like a bottomless pit of regulations until the govt. strangles the life out of business.

What we need here to help people is simply to ditch a "free" market society and just move on to socialism like the countries of europe after they had crony capitalism that was blamed on free market laisse faire capitalism. It didn't end well for them though... and it's still proven illusory.

The point is, if you want more government, stop bitching about the governments shitty regulatory and subsidy programs and embrace it. More of this is more of what we have.

he article was more that the most applied current economic thought/models take it for granted that unlimited growth is good an possible -- while science tells us this just can't be so. The earth has limited resources, gets limited energy, and can only handle so much waste.

this.

Actually, if the market was opened up, ingenuity would be enhanced to solving the energy problems we have. To say that the earth has limited energy isn't so either. It does have limited fossil fuels. But there are plenty of ways to harness energy. Take a look at Tesla's work. Heavy regulations only stops competition in the energy market. Just what the large energy controllers want. To keep control of all the energy production.

i mean ignorant in the literal sense. as in uninformed. what percentage of people are informed enough to make decisions based on practice. if this were the case, noone would drive high emission cars. noone would eat fast food. noone would buy products that are made by destroting the environment. noone would keep their money in major banks. we wouldn't be in this mess in the first place. yet here we are.

There is certain to be an educational shift if the market were to open up. That means media, industry and education. We get small doses of what you speak of and that is why some of us are aware. Open markets promote good information which then structures education and we work toward better understanding of our environment, business and the impacts.

I realize it appears i paint this grand picture of free markets. But the truth is that there are down sides too. People will lose. We will pollute and their will be suffrage from that until we can pin point it through the law and education to minimize negatives and maximize positives. Again, there is no such thing as a perfect world. But attempting to control the variables has long since been proven ineffective in fixing the problems. These problems are social and no one has a full answer. We shouldn't look to govt. to provide it either. We the people should work for that.

The judicial branch upholds the laws. If you dump toxin in my water way and me an my entire town of 500 collectively sue for damage, your company is will be held responsible to the fullest extent of the law. This is where govt is charged with defining property rights thoroughly to make sure the penslties match the damage. In an free market the market will take care of fraudd through competition.

But who job is it to test the water to find if toxins have been dumped?